"A quick look at the company’s financial statements makes this 10% yield look like free money. As of September 30, 2011 the company had about as much cash as it had debt and had a large, untapped bank facility which provides even more liquidity. Although RadioShack has bonds maturing in 2013, the cash on hand and credit facility available should be more than adequate to pay off the bonds as they mature even if RadioShack is unable to issue new bonds. While the company has recently experienced reduced operating income as margins come under pressure, the business requires very little capital expenditures to maintain operations and grow and in a recent press release management indicated that they expect to remain free cash flow positive for 2012. Finally, while RadioShack does not own the real estate it occupies, there is significant tangible asset support for the bonds with net working capital (aside from cash) almost equal to the bonds outstanding.

Yet we have not yet done a critical piece of due diligence, namely a review of the prospectus for the bonds..."

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